WHAT THE MEDIA SAY: Analysts are divided over Friends float

Organisation: Friends Provident

Issue: Flotation

Shares in Friends Provident, 'the not big enough insurer' (The Guardian

6/7), made their stock market debut on Monday at the lower end of the

predicted range but amid institutional demand reported to be at least

three times oversubscribed.

But, while 1.7 million policyholders who pocketed windfall gains

following the flotation of the 170-year-old group has something to smile

about, media coverage of the UK's largest IPO so far this year was far

from cheery.

Indeed this demutualisation story was largely covered by the City beat

in a way that was neither friendly nor provident in its view of the

company's prospects.

The fact that Friends Provident is set to enter the FTSE 100 did little

to dampen the negative zeal of commentators, who variously described the

flotation in a depressed market as a 'drab affair' and surrounded by

gloom at a 'pig-ugly time'(The Guardian 6/7).

Amid a plethora of negative sinking headlines, analysts were divided

over the prospects of Friends Provident in the run up to Monday's debut

and whether customers should hold on to their windfall shares, buy more

or take the money and sail away.

Dropping the anchor on the whole flotation was The Telegraph Online,

which likened the insurer to a 'boat in a storm, chugging its way to the

stock market' and there were few correspondents willing to launch the

demutualisation into a fair wind.

Almost alone, thisismoney decided Friends Provident has 'captured the

public imagination' while The Daily Telegraph said that in the current

market, the flotation 'must count as a success' (7/7).

Chief executive Keith Satchell battled against opinion that the company

would not be able to hold its own in an increasingly competitive market

but his comments were mainly lost in the general malaise and the The

Guardian predicted its 'short-lived independence'.

The almost unanimous view was that the company, originally set up as a

friendly society by the Quakers, would now become a takeover target.

Whether there are choppy waters ahead remains to be seen but, if there

is a shark attack looming, it will be those shareholders who kept faith

with Friends Provident who could be having the last laugh.

Analysis and commentary by Echo Research. More information can be found

at: www.echoResearch.com.

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